Recapitalisation: PENCOM Stops Commercial Banks

The National Pension Commission, PENCOM, has directed Pension Fund Administrators, PFAs, not to invest in the ongoing capital raise of commercial banks, saying such move contradicts the Nigerian Pension Act.

The magazine report that some commercial banks have yet to meet the N500 billion recapitalization requirements of the Central bank of Nigeria, CBN, which has set March 31, 2026 as deadline for the banks to increase their capital.

Earlier, the CBN Governor Yemi Cardoso disclosed that eight banks have met their recapitalization requirements.

“I am pleased to note that a significant number of banks have raised the required capital through rights issues and public offerings well ahead of the 2026 deadline. I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMES and supporting investment in critical sectors of our economy,” Cardoso said.

The banks, according to the magazine’s checks are Access Holdings, Zenith Bank, Stanbic IBTC, Wema Bank, Lotus Bank, Greenwich Merchant Banks, Jaiz Bank and Providus Bank

With less than eight months to the deadline set for the banks by the Cardoso-led CBN, some banks according to sources in the sector  are currently in a horse race, trying to get funding to raise their capital in line with the apex bank’s directive.

“Some banks have approached some Pension Firms for investment, because of the billions in their kitty which are currently laying fallow. The bank managers think the funds can be invested in their shares.

As at June last year, PENCOM disclosed that  its total pension funds had peaked at over N20 trillion.

PENCOM however stated that the huge funds cannot be invested in Additional  Tier 1  capital of commercial banks, which it noted does not have maturity date and incentives to redeem.

The warning was contained in a circular issued to PFAs by the NPC Director, Surveillance Department, A.M. Saleem, stressing that Additional Tier-1, AT1 Capital of Deposit Money Banks falls short of Pension Act requirements.

PENCOM said in the circular that “AT1 as approved by Central Bank of Nigeria regulations ‘is perptual, i.e., there is no maturity date and there are no incentives to redeem.’ This provision is contrary to Section 2.4 of the Regulations on Investment of Pension Fund Assets, which states that ‘PFAs shall not invest Pension Fund Assets in instruments that are subject to any type of prohibitions or limitations on the sale or purchase of such instrument, except open/close-end/hybrid funds and specialist investment funds allowed by these Regulations.’

“Arising from the foregoing, PFAs cannot invest pension fund assets in Additional Tier 1 Capital instruments issued by Deposit Money Banks.”